April 26, 2004

Total Unemployed Denied Federal Aid Approaches 1.5 Million

By Isaac Shapiro

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The number of individuals exhausting their regular state unemployment benefits in March without qualifying for any additional federal unemployment assistance eclipsed the record high that was set just two months ago, in January 2004.  New Labor Department data show that in March about 354,000 jobless workers exhausted their regular benefits without being able to receive additional federal aid.  In no other month on record, with data available back to 1971, have there been so many “exhaustees.”

Further, from late December, when the federal program designed to help the long-term unemployed began phasing out, through the end of April, nearly 1.5 million jobless workers will have exhausted their regular unemployment benefits without receiving additional aid.  For a period of this length, this is also a record number of exhaustees.  (This analysis includes state-by-state data on the number of exhaustees from late December through April.)

These data suggest that the welcome news that jobs grew by 308,000 in March has yet to have had much of a spillover benefit to the long-term unemployed.  To the contrary, the same labor market report showing the March jobs growth also showed, if anything, an increase in long-term unemployment.

These findings are consistent with Congressional testimony given by Federal Reserve Chair Alan Greenspan just a few days ago.  He noted that “an exceptionally high number” of unemployed are losing their unemployment benefits and reiterated his support for resuming temporary federal benefits, saying “I think it’s a good idea largely because of the size of the degree of exhaustions.”[1]

Chairman Greenspan’s focus on exhaustion levels as the key indicator in assessing whether temporary federal benefits should be resumed is appropriate.  It is, after all, those individuals who exhaust their regular benefits who constitute the target of this aid.


The March Record

The Temporary Extended Unemployment Compensation (TEUC) program was created in March 2002 to provide additional weeks of federally funded unemployment benefits to jobless workers who have run out of regular, state-funded unemployment benefits but have not found a job.  TEUC provided up to 13 weeks of benefits to most workers who participated in it.  Individuals who have exhausted their regular unemployment benefits since December 20 have not been eligible for TEUC aid.

The Labor Department just released new information on the number of unemployed individuals exhausting their regular unemployment benefits in March.  It shows:


Total Going Without Aid Approaches 1.5 Million

The Center on Budget and Policy Priorities has been keeping a running tally of the number of workers who have exhausted their regular benefits and gone without federal aid.  Last month’s report estimated that 1,122,000 unemployed workers would exhaust their regular benefits and go without federal aid from December 20 through the end of March.[3]  The actual exhaustion data just released for March permit a precise calculation of total exhaustions from late December through March.  The actual figure was slightly higher — 1,135,000.

Based in significant part on the March data, this analysis estimates the number of unemployed who will exhaust their regular benefits in April, thereby creating a current estimate of how many unemployed have exhausted their regular benefits and gone without federal aid since the TEUC program was phased out.

Table 1 at the back of this analysis breaks out these figures on a state basis.  It shows that throughout the nation large numbers of individuals are exhausting their regular benefits and going without federal aid.


March Job Growth Brings Little Relief to the Long-term Unemployed

The positive news that jobs grew by 308,000 in March received substantial attention.  This figure was part of the standard Bureau of Labor Statistics monthly labor market report.  What received less attention was that the report also indicated that the problems of the long-term unemployed — those out of work 27 weeks or more — appeared to grow worse:

The number of long-term unemployed appeared to rise from 1.871 million in February to 1.988 million in March.  (The rise was not statistically significant.)

The share of the unemployed who had been out of a job for at least 27 weeks increased to 23.9 percent — nearly one in four.  This is the largest share in more than 20 years (since it was 24.5 percent in July 1983).


Even Sustained Job Growth Will Not Soon Solve the Problems of the Long-term Unemployed, a Conclusion Apparently Shared by Chairman Greenspan

The hope is that the March job growth marks the beginning of sustained, significant job creation.  But even if it does, the data above suggest the TEUC program should be resumed for a number of months.  It will take several months or more of robust job growth to whittle the number of long-term unemployed to a more typical size.

This conclusion apparently is shared by Federal Reserve Chair Alan Greenspan.  The testimony referred to earlier, in which he supported, on a temporary basis, the resumption of federal benefits to those who exhaust their regular benefits, was generally positive about near-term economic prospects.  In particular, Chairman Greenspan was reasonably optimistic about employment gains continuing at a significant pace.  Yet, immediately after his optimistic comments about job growth, his testimony reads:[6]

“Still, the anxiety that many in our workforce feel will not subside quickly.  In March of this year, about 85,000 jobless individuals per week exhausted their unemployment insurance benefits — more than double the 35,000 per week in September 2000.  Moreover, the average duration of unemployment increased from twelve weeks in September 2000 to twenty weeks in March of this year.  These developments have led to a notable rise in insecurity among workers.”

Then, as noted, in the question-and-answer period after his testimony, he expressed his support for resuming temporary federal benefits.

End Notes:

[1] Transcript from Federal Document Clearing House, as distributed by Bloomberg news service, of the question and answer session of the testimony of Alan Greenspan, Chairman of the Board of Governors of the Federal Reserve System, before the Joint Economic Committee, April 21, 2004.

[2] This finding holds even if the number of exhaustees in previous years is adjusted upward to reflect the growth in the labor force since then.

[3] Isaac Shapiro, “More Than One Million of the Unemployed Have Now Been Denied Aid Due to End of Federal Program,” Center on Budget and Policy Priorities, March 25, 2004.

[4] At the end of December four states qualified for the extended benefits program; now only Alaska does.

[5] As is the case with the monthly record in March, this finding also holds even if the number of exhaustees in previous years is adjusted upward to reflect the growth in the labor force since then.

[6] Statement of Alan Greenspan, Chairman of the Board of Governors of the Federal Reserve System, before the Joint Economic Committee, April 21, 2004, page 3.